Vigilance in Banks | India | Banking

In this article we will discuss about:- 1. Meaning and Vision for Vigilance in a Bank 2. Kinds of Vigilance Activities 3. Principles of Preventive Vigilance.

Meaning and Vision for Vigilance in a Bank:

The word ‘vigilance’ means alertness, watchfulness or circumspection. Preventive vigilance signifies continuous watchfulness on the part of the top management of the bank so as to prevent happening of any untoward incidents with adverse financial implications for the organisation and its customers.

Vision:

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A bank should have a vision to attain high levels of systems integrity by creating awareness and developing commitment and probity at all levels and activities, contributing towards an organisation with world class standards of efficiency and professionalism.

Similarly, a banking organisation should have a mission to inculcate a sense of alertness and awareness, and widespread compliance with systems and procedures in the daily functions of the bank, right up to the grassroots level and to act as a catalyst for eliminating system weaknesses.

Necessary steps need to be initiated to educate the customers about the need for practising vigilance so that they do not lose their hard-earned money due to their inadvertence and negligence. Necessary measures should be adopted to generate a passion for achieving the highest ethical and professional standards, upholding the integrity and dignity of the bank.

Based upon the organisational requirement of the bank, the vision and mission may be suitably modified and be prominently displayed in the office premises, and individual employees be persuaded to follow the same during their day-to-day work in the bank.

Kinds of Vigilance Activities:

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Vigilance activity has the following components:

(i) Preventive Vigilance,

(ii) Detective/Investigative Vigilance, and

(iii) Punitive Vigilance.

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Preventive Vigilance forms the first stage, much ahead of the other forms of vigilance. Only when preventive vigilance fails does the question of detective/investigative and punitive vigilance arise. The well-known doctrine ‘Prevention is better than cure’ applies to domestic as also international situations equally. As we lock our houses and take our insurance policies to guard against possibilities of theft and burglary, many preventive steps can be taken to reduce chances of frauds and malfeasance in the banking sector.

Preventive vigilance cannot be a one-time exercise but has to be a continuous process spanning the entire life of an organisation. As part of the process, there is a need to enhance a sense of values and ethics of the bank and the individual.

Ideally, if preventive vigilance mechanism is effective and successful, there will not be need for any investigating or punitive vigilance. At the same time, it is also an accepted fact that no financial institution can have an absolutely zero fraud and 100% compliance status. What is intended is moving towards a situation like zero non-compliance.

Principles of Preventive Vigilance:

Preventive vigilance focuses on taking proactive measures in time so that the bank does not land in a bigger loss in future.

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There are certain essential ingredients of preventive vigilance:

(i) Creating a value-based organisation;

(ii) Creating a sense of belonging and inculcating an ingrained habit of alertness among the employees;

(iii)Putting in place the best practices and procedures in the organisation. Strict implementation of ‘Know Your Customer’ (KYC) norms should be ensured;

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(iv) Educate the customers/outsiders about the organisation ethics, values and systems that are serving their interests; and